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[FrankT]

Game
(Billions of yen, millions of U.S. dollars)
Second quarter ended September 30

2007 2008 Change in yen 2008
Sales and operating revenue ¥243.4 ¥268.5 +10.3% $2,582
Operating income (loss) (96.7) (39.5) - (379)

Unless otherwise specified, all amounts are on a U.S. GAAP basis.

Sales increased 10.3% year-on-year (a 15% increase on a local currency basis) to ¥268.5 billion ($2,582
million).

Hardware: Overall hardware sales increased as a result of an increase in sales of PS3 and PSP. Sales of PlayStation®2 (“PS2”) decreased year-on-year.

Software: Despite an increase in PS3 and PSP software sales, overall software sales decreased as a result of a decrease in PS2 software sales.

An operating loss of ¥39.5 billion ($379 million) was reported, an improvement of ¥57.2 billion year-on-year.

The decrease in operating loss in the current quarter was primarily due to PS3 hardware cost reductions and increased sales of PS3 software, as well as strong sales of PSP hardware.

Worldwide hardware unit sales (increase/decrease year-on-year):
→ PS2: 2.50 million units (a decrease of 0.78 million units)
→ PSP: 3.18 million units (an increase of 0.60 million units)
→ PS3: 2.43 million units (an increase of 1.12 million units)

Worldwide software unit sales (increase/decrease year-on-year):
→ PS2: 23.1 million units (a decrease of 14.9 million units)
→ PSP: 11.8 million units (a decrease of 0.8 million units)
→ PS3: 21.1 million units (an increase of 10.7 million units)


Inventory, as of September 30, 2008, was ¥243.2 billion ($2,338 million), which represents a ¥4.6 billion
decrease compared with the level as of September 30, 2007. Inventory increased by ¥83.7 billion, or 52.5%,
compared with the level as of June 30, 2008, due to increased inventory of PS3 and PSP hardware for the
holiday sales season.

http://www.sony.net/SonyInfo/IR/financial/fr/08q2_sony.pdf

 

[YYZ]

It says "an operating loss" of $379M?

 

[Meier]

It says "an operating loss" of $379M?

Hence the parentheses around $379 in the title.

 

[The Faceless Master]

Hence the parentheses around $379 in the title.

kind of a silly way to do things in the title

 

[mr_bishiuk]

Thats not too bad, if they keep the PS3 price as is then they might make a profit in the 4th quarter

 

[FrankT]

Thats not too bad, if they keep the PS3 price as is then they might make a profit in the 4th quarter

Absolutely have to maintain the price at this rate, which of course is what they have been reinforcing for some time now.

 

[YYZ]

Hence the parentheses around $379 in the title.

Sorry, didn't know that meant losses, title says Q2 earnings so I thought they made money.

 

[Private Hoffman]

Ouch. That's pretty surprising actually.

But, what they could be doing (as someone else pointed out in another thread), is offloading bunch of Q3 'costs' (80 GB PS3 production, etc), into this one quarter and then you'll have a few subsequent quarters of profit for the division.

 

[mr_bishiuk]

Absolutely have to maintain the price at this rate, which of course is what they have been reinforcing for some time now.

yer if they lower the price then they would have to write down their inventory value which would mean a big hit in quarter 4, as they will want to show a profit in the holiday quarter i'd say the chance of a price cut is 0%

 

[mr_bishiuk]

Ouch. That's pretty surprising actually.

But, what they could be doing (as someone else pointed out in another thread), is offloading bunch of Q3 'costs' (80 GB PS3 production, etc), into this one quarter and then you'll have a few subsequent quarters of profit for the division.

Thats not quite how accounting works!

 

[Hunahan]

kind of a silly way to do things in the title

It's a business standard.

Anyone who's used to viewing financial statements will immediately assume that parenthesis indicates a loss or negative.

 

[Regulus Tera]

At least they lost less money than last time. That's an improvement of sorts. :/

 

[Private Hoffman]

yer if they lower the price then they would have to write down their inventory value which would mean a big hit in quarter 4, as they will want to show a profit in the holiday quarter i'd say the chance of a price cut is 0%

Given that it's almost November and we haven't seen a price cut, none is coming anytime soon.

I'm guessing they will drop to 299 sometime in 2009, certainly in time for next year's holiday season. The question is when.

They have a number of big releases (KZ2, Resident Evil 5) to carry them through the early part of next year, so it may not be until next fall.

 

[itxaka]

I still can't believe that the ps2 is shitting on hardware and software worldwide sales on the ps3.

Man, that console was and is a beast. They should have called the ps3 the ps2HD.

 

[mr_bishiuk]

It's a business standard.

Anyone who's used to viewing financial statements will immediately assume that parenthesis indicates a loss or negative.

This is gaf dude not some business convention. In fact no business would put parenthesis in a sentence to show a loss

 

[polyh3dron]

This is gaf dude not some business convention. In fact no business would put parenthesis in a sentence to show a loss

So banks aren't businesses then?

 

[suffah]

This is gaf dude not some business convention. In fact no business would put parenthesis in a sentence to show a loss

+1

 

[suffah]

So banks aren't businesses then?

Financial statements, sure, but in actual sentences?

 

[FrankT]

Heh, jeez chill on the parentheses already. If it makes you feel better some mod can add loss to the title. :lol

 

[Private Hoffman]

Thats not quite how accounting works!

What I'm suggesting is that with the new 80 GB SKU, that production could have been ramped up heavily during Q2 in preparation of the big Q3 rush; I'm not saying it is the case, as I don't know how Sony's production operates and whether they produce them consistently throughout the year, or whether they ramp up during certain quarters.

 

[mr_bishiuk]

What I'm suggesting is that with the new 80 GB SKU, that production could have been ramped up heavily during Q2 in preparation of the big Q3 rush; I'm not saying it is the case, as I don't know how Sony's production operates and whether they produce them consistently throughout the year, or whether they ramp up during certain quarters.

If you ramp up the costs will be allocated to the stock and included in inventory until the unit is sold. However there may be an issue if the PS3 is still being sold at a loss in which case at the end of the quarter the total cost of the PS3 inventory should be written down to its sales value in which case you are right, the hit for some costs will be taking early. However I wouldn't be surprised if SOny's accountants come up with an (dodgy) explanation as to why they could value the inventory at production costs rather than net realisable value, taking into account future revenue's etc

 

[itxaka]

If you ramp up the costs will be allocated to the stock and included in inventory until the unit is sold. However there may be an issue if the PS3 is still being sold at a loss in which case at the end of the quarter the total cost of the PS3 inventory should be written down to its sales value in which case you are right, the hit for some costs will be taking early. However I wouldn't be surprised if SOny's accountants come up with an (dodgy) explanation as to why they could value the inventory at production costs rather than net realisable value, taking into account future revenue's etc

Didn't they said months ago that they expected it to start giving benefits around...now?

Any news on that?

 

[mr_bishiuk]

So banks aren't businesses then?

If an company put in a document

"We have earnings of ($379m) for the year"

They'd get laughed at and appear somewhat desperate, like they hope the people reading dont understand.

 

[Private Hoffman]

If you ramp up the costs will be allocated to the stock and included in inventory until the unit is sold. However there may be an issue if the PS3 is still being sold at a loss in which case at the end of the quarter the total cost of the PS3 inventory should be written down to its sales value in which case you are right, the hit for some costs will be taking early. However I wouldn't be surprised if SOny's accountants come up with an (dodgy) explanation as to why they could value the inventory at production costs rather than net realisable value, taking into account future revenue's etc

Yeah, that's what I was suggesting. PS3 production is still very, very expensive and being sold at a loss. If they take this into consideration for their accounting, it may be the explanation.

Also, software sales weren't as strong this quarter. The only noteworthy release I can think of was Madden, and that paled in comparison to MGS4 and GTA4 sales for them (whatever they do get from third parties) last quarter. Still, Microsoft was pretty much in the same boat and they turned a profit.

 

[FrankT]

The one thing that could really hurt them this quarter is the Yen trade. It's strengthening over the last few weeks has been pretty insane. That currency exchange will not look very pretty when they receive less and less dollars/euros for their goods. At a time when they are trying to build a profit this currency situation could not have come at a worse time. Everything they sale from now until Christmas will be impacted unless this supposed interest rate cut by the BOJ by end week has a significant and lasting effect.

If an company put in a document

"We have earnings of ($379m) for the year"

They'd get laughed at and appear somewhat desperate, like they hope the people reading dont understand.

Earnings are not net losses or profits. The title only indicated Sony reported their overall Q2 earnings, which overall they made a net profit albeit a much smaller one YoY while posting a net loss in the game division, hence ( ). Seriously now.

 

[TheHeretic]

If you ramp up the costs will be allocated to the stock and included in inventory until the unit is sold. However there may be an issue if the PS3 is still being sold at a loss in which case at the end of the quarter the total cost of the PS3 inventory should be written down to its sales value in which case you are right, the hit for some costs will be taking early. However I wouldn't be surprised if SOny's accountants come up with an (dodgy) explanation as to why they could value the inventory at production costs rather than net realisable value, taking into account future revenue's etc

Theres no way for Sony to actually bolster Q2 figures through production without doing something thats breaking GAAP. They might be doing it with RnD and Software development, however.

 

[Brimstone]

Over a quarter of a billion dollar loss in just 3 months. That is seriously bleeding cash.

 

[nextgeneration]

The one thing that could really hurt them this quarter is the Yen trade. It's strengthening over the last few weeks has been pretty insane. That currency exchange will not look very pretty when they receive less and less dollars/euros for their goods. At a time where they are trying to build a profit this currency situation could not have come at a worse time. Everything they sale from now until Christmas will be impacted unless this supposed interest rate cut by the BOJ by end week has a significant and lasting effect.

Yeah, it's really bad and with this worldwide recession, not a lot of people are going to be buying Sony's tv's and their high end electronics. We shouldn't expect to see any ps3 price cuts until late next year, at the very earliest.

 

[Kujo]

What does this bring the LTD shipment numbers up to for the PS3/PSP?

 

[AniHawk]

Over a quarter of a billion dollar loss in just 3 months. That is seriously bleeding cash.

Well on the plus side, there's still 8 years to go.

And hey, maybe next quarter they'll sell more PS3s than PS2s. I guess anything's possible.

 

[inpHilltr8r]

If an company put in a document

"We have earnings of ($379m) for the year"

They'd get laughed at and appear somewhat desperate, like they hope the people reading dont understand.

(win)

 

[TheHeretic]

Over a quarter of a billion dollar loss in just 3 months. That is seriously bleeding cash.

Remarkably so considering the biggest problems with the PS3 were its development and early manufacturing. Its hard to imagine how they've lost so much money in so little time.

 

[FrankT]

What does this bring the LTD shipment numbers up to for the PS3/PSP?

16.84 I believe for the PS3.


Doing rough estimate they have had a loss of 3.62 Billion (3.3 billion+379 million- 50 million profit last quarter give or take IIRC) this generation.

 

[Hunahan]

If an company put in a document

"We have earnings of ($379m) for the year"

They'd get laughed at and appear somewhat desperate, like they hope the people reading dont understand.

I can understand feeling a little embarrassed about not knowing the standards for parenthesis usage in business context, but don't compound the problem by trying to argue something that you really don't know.

The only way that someone would be laughed at for using parenthesis in a business context is if they weren't trying to indicate a negative. There is really no exception to the rule.

It's not that they are "hoping people don't understand," it's that they will assume that people do.

 

[kevm3]

Just as PSP got off to a slow start and has been picking up lately, I have a feeling that the PS3 will get a surge in sales eventually. Once games like Killzone 2 and God of War 3 come out, we'll start to see things change for Sony.

 

[Nocebo]

Just as PSP got off to a slow start and has been picking up lately, I have a feeling that the PS3 will get a surge in sales eventually. Once games like Killzone 2 and God of War 3 come out, we'll start to see things change for Sony.

You're a bit late to the "let's wait for" party.

 

[Count Dookkake]

(Year of the PS3)

 

[HK-47]

(Year of the PS3)

Clever

 

[Miburou]

The PSP is the only whose hardware sales went down compared to Q1.

As for its LTD, it's hard to calculate because Sony switched methods, but since the new method was used (from April 2006), the PSP has sold 30.32M and the old figures for the period before that are 17.03M

 

[Yes Boss!]

Just as PSP got off to a slow start and has been picking up lately, I have a feeling that the PS3 will get a surge in sales eventually. Once games like Killzone 2 and God of War 3 come out, we'll start to see things change for Sony.

Now, now, now...let's not get carried away.

 

[Phife Dawg]

With the cost reduction and 2008 being not as bleak as 2007 for PS3 in general I didn't expect them to post such a big loss. Sure it's an improvement but we'll be stuck with the current price-point for quite some time to come. Which is unfortunate considering the situation.

This I don't understand:

Software: Despite an increase in PS3 and PSP software sales, overall software sales decreased as a result of a decrease in PS2 software sales.

Worldwide software unit sales (increase/decrease year-on-year):
→ PSP: 11.8 million units (a decrease of 0.8 million units)

 

[Agent Icebeezy]

(Year of the PS3)

:lol :lol

 

[adversesolutions]

Does anyone else notice that the most piracy-proof console is doing the worst sales-wise?

DS, PSP, 360, all piratable, all doing well worldwide. PSP and DS extremely well.

Wii is a different story, but it has a different install base, people who aren't necessarily hardcore gamers in the first place.

Just funny that anti-piracy GAF finds its formula reversed, the most piratable consoles are for the most part the most popular.

 

[JoshuaJSlone]

16.84 I believe for the PS3.

I've got 14.37 after the last quarter, so this would bring it to just 16.8.

(Year of the PS3)

:lol

 

[Private Hoffman]

Just as PSP got off to a slow start and has been picking up lately, I have a feeling that the PS3 will get a surge in sales eventually. Once games like Killzone 2 and God of War 3 come out, we'll start to see things change for Sony.

Software isn't Sony's problem right now. It hasn't been for 2008. They have a really great lineup of games and exclusives for this year, and next year looks to be even better. Demand (in the west) is quite high for the PS3 despite its high cost.

But in terms of finances, their biggest concern has to be with cost cutting measures. You would think that the PS3 is now to the point where they should be close to breaking even, but these figures suggest otherwise.

 

[Miburou]

I've got 14.37 after the last quarter, so this would bring it to just 16.8.

:lol

It was 14.41M + 2.43M (16.84M) according to this: http://www.scei.co.jp/corporate/data/bizdataps3_sale.html

 

[AniHawk]

Software isn't Sony's problem right now. It hasn't been for 2008. They have a really great lineup of games and exclusives for this year, and next year looks to be even better.

But in terms of finances, their biggest concern has to be with cost cutting measures. You would think that the PS3 is now to the point where they should be close to breaking even, but these figures suggest otherwise.

I'm guessing they're starting to ramp up PS4 R&D. Why I predict that when compared to the PS3, it will be twice as powerful, 10,000 times larger, and so expensive that only the five richest kings in Europe will own them.

 

[mr_bishiuk]

I can understand feeling a little embarrassed about not knowing the standards for parenthesis usage in business context, but don't compound the problem by trying to argue something that you really don't know.

The only way that someone would be laughed at for using parenthesis in a business context is if they weren't trying to indicate a negative. There is really no exception to the rule.

It's not that they are "hoping people don't understand," it's that they will assume that people do.

Hilarious, if you want you come here and sit at my desk and do a business valuation report and MI report for RBS bank that I have to complete by Friday you are more than welcome.

 

[Brimstone]

Does anyone else notice that the most piracy-proof console is doing the worst sales-wise?

DS, PSP, 360, all piratable, all doing well worldwide. PSP and DS extremely well.

Wii is a different story, but it has a different install base, people who aren't necessarily hardcore gamers in the first place.

Just funny that anti-piracy GAF finds its formula reversed, the most piratable consoles are for the most part the most popular.

Soon after the rooster crows in the morning, the sun rises in the sky. The rooster must be causing the sun to rise.

 

[Cool Hand Luke]

Did they release any first party titles during the quarter? Sony has so many software studios working for them that they could be causing some of the losses. GT5, KZ2, TRICO, GoW, R2, Heavy Rain, HOME, Infamous, Uncharted 2, Motorstorm, LBP etc. When they release these titles they should be profitable...

379 millions is still huge loss though. You'd think that software sales and the strong performance from PS2 and PSP should be able to make up for the PS3 losses by now.